Bull of the Day: American Woodmark (AMWD)
Continued recovery in the housing market and resilient consumer demand have resulted in rising estimates, sending this cabinet maker to Zacks rank #1 (Strong Buy).
About the Company
American Woodmark Corporation (AMWD) is a leading manufacturer and distributor of kitchen and bath cabinets for remodeling and new home construction markets.
The company manufactures cabinets under four major brands: American Woodmark, Timberlake Cabinetry, Shenandoah Cabinetry and Waypoint Living Spaces and sells more than 435 cabinet lines in a wide variety of design, materials and finishes.
Its products are sold through a network of independent dealers and distributors, and directly to major builders and Lowe's and The Home Depot. The company operates 11 manufacturing facilities and 9 builder service centers across the country.
Excellent Quarterly Results
The company reported its fourth quarter ended April 30, 2013 on June 4, 2013. Net sales rose by 26% compared with the fourth quarter of the prior fiscal year to $171.1 million. Net income for the quarter was $5.2 million, or $0.34 per diluted share, compared with a net loss in the fourth quarter of fiscal year 2012 of ($6.0 million), or ($0.42) per diluted share.
The results were substantially ahead of the Zacks consensus estimate of $0.17 per share.
The Company experienced double digit sales gains in each of its sales channels during the quarter, led by new construction sales growth of more than 40%. Remodeling market also recorded a decent mid-single-digit improvement, resulting in a double-digit surge in sales.
The company's gross profit margin for the quarter was 18.9% of net sales, up from about jump over the 15% gross margin rate for the first 3 quarters and well above the prior year's 12.7% of net sales.
Estimates Revisions
As a result of strong results, Zacks consensus estimate for the quarter ended July 31 now stands at $0.31 per share up from $0.23 per share, 60 days ago. The estimate for the current year is also up to $1.38 per share from $1.04 per share earlier.
Rising estimates sent AMWD to a Zacks rank#1 on June 6, 2013. AMWD has a solid track of earnings surprises—with an average positive surprise of 215.8% for the last four quarters.
The Bottom Line
The housing market continues on its growth trajectory. Inventories of new and existing homes remain at low levels and while mortgage rates have risen from their recent record lows, they are still quite low from historical perspective. Further with improving job market, the demand from remodeling market will also improve going forward.
AMWD is a Zacks Rank#1 (Strong Buy) stock. It also has a Zacks recommendation of “Outperform” and looks poised to deliver excellent returns.
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